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Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
TOPIC: Collateral Source Rule
G.R. NO. 175773, June 17, 2013 a. The room and board must not exceed three hundred pesos (P300.00)
per day up to a maximum of thirty-one (31) days. Similarly, Doctor’s
MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION Call fees must not exceed three hundred pesos (P300.00) per day for a
(MMPSEU), Petitioner, v. MITSUBISHI MOTORS PHILIPPINES maximum of thirty-one (31) days. Any excess of this amount shall be
CORPORATION, Respondent. borne by the employee.

DECISION b. Confinement must be in a hospital designated by the COMPANY. For

this purpose, the COMPANY shall designate hospitals in different
convenient places to be availed of by the dependents of employees. In
DEL CASTILLO, J.: cases of emergency where the dependent is confined without the
recommendation of the company doctor or in a hospital not designated
The Collective Bargaining Agreement (CBA) of the parties in this case provides by the COMPANY, the COMPANY shall look into the circumstances of
that the company shoulder the hospitalization expenses of the dependents of such confinement and arrange for the payment of the amount to the
covered employees subject to certain limitations and restrictions. Accordingly, extent of the hospitalization benefit.
covered employees pay part of the hospitalization insurance premium through
monthly salary deduction while the company, upon hospitalization of the covered c. The limitations and restrictions listed in Annex "B" must be observed.
employees’ dependents, shall pay the hospitalization expenses incurred for the
same. The conflict arose when a portion of the hospitalization expenses of the d. Payment shall be direct to the hospital and doctor and must be covered
covered employees’ dependents were paid/shouldered by the dependent’s own by actual billings.
health insurance. While the company refused to pay the portion of the hospital
expenses already shouldered by the dependents’ own health insurance, the
Each employee shall pay one hundred pesos (P100.00) per month through
union insists that the covered employees are entitled to the whole and
salary deduction as his share in the payment of the insurance premium for the
undiminished amount of said hospital expenses.
above coverage with the balance of the premium to be paid by the
COMPANY. If the COMPANY is self-insured the one hundred pesos (P100.00)
By this Petition for Review on Certiorari,1 petitioner Mitsubishi Motors Philippines
per employee monthly contribution shall be given to the COMPANY which shall
Salaried Employees Union (MMPSEU) assails the March 31, 2006
shoulder the expenses subject to the above level of benefits and subject to the
Decision2 and December 5, 2006 Resolution3 of the Court of Appeals (CA) in
same limitations and restrictions provided for in Annex "B" hereof.
CA-G.R. SP No. 75630, which reversed and set aside the Voluntary Arbitrator’s
December 3, 2002 Decision4 and declared respondent Mitsubishi Motors
The hospitalization expenses must be covered by actual hospital and doctor’s
Philippines Corporation (MMPC) to be under no legal obligation to pay its
bills and any amount in excess of the above mentioned level of benefits will be
covered employees’ dependents’ hospitalization expenses which were already
for the account of the employee.
shouldered by other health insurance companies.
For purposes of this provision, eligible dependents are the covered employees’
Factual Antecedents
natural parents, legal spouse and legitimate or legally adopted or step children
who are unmarried, unemployed who have not attained twenty-one (21) years of
The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 provides
age and wholly dependent upon the employee for support.
for the hospitalization insurance benefits for the covered dependents,
thus:chanroblesvirtualawlibrary
This provision applies only in cases of actual confinement in the hospital for at
least six (6) hours.
SECTION 4. DEPENDENTS’ GROUP HOSPITALIZATION INSURANCE – The
COMPANY shall obtain group hospitalization insurance coverage or assume Maternity cases are not covered by this section but will be under the next
under a self-insurance basis hospitalization for the dependents of regular succeeding section on maternity benefits.6
employees up to a maximum amount of forty thousand pesos (P40,000.00) per
confinement subject to the following:chanroblesvirtualawlibrary
When the CBA expired on July 31, 1999, the parties executed another
CBA7 effective August 1, 1999 to July 31, 2002 incorporating the same

Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
provisions on dependents’ hospitalization insurance benefits but in the increased
amount of P50,000.00. The room and board expenses, as well as the doctor’s
call fees, were also increased to P375.00.
On separate occasions, three members of MMPSEU, namely, Ernesto Calida
(Calida), Hermie Juan Oabel (Oabel) and Jocelyn Martin (Martin), filed claims for
reimbursement of hospitalization expenses of their dependents.
MMPC paid only a portion of their hospitalization insurance claims, not the full
amount. In the case of Calida, his wife, Lanie, was confined at Sto. Tomas
University Hospital from September 4 to 9, 1998 due to Thyroidectomy. The
medical expenses incurred totalled P29,967.10. Of this amount, P9,000.00
representing professional fees was paid by MEDICard Philippines, Inc.
(MEDICard) which provides health maintenance to Lanie.8 MMPC only paid
P12,148.63.9 It did not pay the P9,000.00 already paid by MEDICard and the
P6,278.47 not covered by official receipts. It refused to give to Calida the
difference between the amount of medical expenses of P27,427.1010 which he
claimed to be entitled to under the CBA and the P12,148.63 which MMPC
directly paid to the hospital.
As regards Oabel’s claim, his wife Jovita Nemia (Jovita) was confined at The
Medical City from March 8 to 11, 1999 due to Tonsillopharyngitis, incurring
medical expenses totalling P8,489.35.11 Of this amount, P7,811.00 was paid by
Jovita’s personal health insurance, Prosper Insurance Company
(Prosper).12 MMPC paid the hospital the amount of P630.87,13 after deducting
from the total medical expenses the amount paid by Prosper and the P47.48
discount given by the hospital.
In the case of Martin, his father, Jose, was admitted at The Medical City from
March 26 to 27, 2000 due to Acid Peptic Disease and incurred medical
expenses amounting to P9,101.30.14 MEDICard paid
P8,496.00.15 Consequently, MMPC only paid P288.40,16 after deducting from
the total medical expenses the amount paid by MEDICard and the P316.90
discount given by the hospital.
Claiming that under the CBA, they are entitled to hospital benefits amounting to
P27,427.10, P6,769.35 and P8,123.80, respectively, which should not be
reduced by the amounts paid by MEDICard and by Prosper, Calida, Oabel and
Martin asked for reimbursement from MMPC. However, MMPC denied the
claims contending that double insurance would result if the said employees
would receive from the company the full amount of hospitalization expenses
despite having already received payment of portions thereof from other health
insurance providers.
This prompted the MMPSEU President to write the MMPC
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TOPIC: Collateral Source Rule
President17 demanding full payment of the hospitalization benefits. Alleging
discrimination against MMPSEU union members, she pointed out that full
reimbursement was given in a similar claim filed by Luisito Cruz (Cruz), a
member of the Hourly Union. In a letter-reply,18 MMPC, through its Vice-
President for Industrial Relations Division, clarified that the claims of the said
MMPSEU members have already been paid on the basis of official receipts
submitted. It also denied the charge of discrimination and explained that the
case of Cruz involved an entirely different matter since it concerned the
admissibility of certified true copies of documents for reimbursement purposes,
which case had been settled through voluntary arbitration.
On August 28, 2000, MMPSEU referred the dispute to the National Conciliation
and Mediation Board and requested for preventive
mediation.19chanroblesvirtuallawlibrary
Proceedings before the Voluntary Arbitrator
On October 3, 2000, the case was referred to Voluntary Arbitrator Rolando
Capocyan for resolution of the issue involving the interpretation of the subject
CBA provision.20chanroblesvirtuallawlibrary
MMPSEU alleged that there is nothing in the CBA which prohibits an employee
from obtaining other insurance or declares that medical expenses can be
reimbursed only upon presentation of original official receipts. It stressed that
the hospitalization benefits should be computed based on the formula indicated
in the CBA without deducting the benefits derived from other insurance
providers. Besides, if reduction is permitted, MMPC would be unjustly benefitted
from the monthly premium contributed by the employees through salary
deduction. MMPSEU added that its members had legitimate claims under the
CBA and that any doubt as to any of its provisions should be resolved in favor of
its members. Moreover, any ambiguity should be resolved in favor of
labor.21chanroblesvirtuallawlibrary
On the other hand, MMPC argued that the reimbursement of the entire amounts
being claimed by the covered employees, including those already paid by other
insurance companies, would constitute double indemnity or double insurance,
which is circumscribed under the Insurance Code. Moreover, a contract of
insurance is a contract of indemnity and the employees cannot be allowed to
profit from their dependents’ loss.22chanroblesvirtuallawlibrary
Meanwhile, the parties separately sought for a legal opinion from the Insurance
Commission relative to the issue at hand. In its letter23 to the Insurance
Commission, MMPC requested for confirmation of its position that the covered
employees cannot claim insurance benefits for a loss that had already been
covered or paid by another insurance company. However, the Office of the

Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
Insurance Commission opted not to render an opinion on the matter as the
same may become the subject of a formal complaint before it.24 On the other
hand, when queried by MMPSEU,25 the Insurance Commission, through Atty.
Richard David C. Funk II (Atty. Funk) of the Claims Adjudication Division,
rendered an opinion contained in a letter,26viz:
January 8, 2002
Ms. Cecilia L. Paras
President Mitsubishi Motors Phils.
[Salaried] Employees Union
Ortigas Avenue Extension,
Cainta, Rizal
Madam:chanroblesvirtualawlibrary
We acknowledge receipt of your letter which, to our impression, basically poses
the question of whether or not recovery of medical expenses from a Health
Maintenance Organization bars recovery of the same reimbursable amount of
medical expenses under a contract of health or medical insurance.
We wish to opine that in cases of claims for reimbursement of medical expenses
where there are two contracts providing benefits to that effect, recovery may be
had on both simultaneously. In the absence of an Other Insurance provision in
these coverages, the courts have uniformly held that an insured is entitled to
receive the insurance benefits without regard to the amount of total benefits
provided by other insurance. (INSURANCE LAW, A Guide to Fundamental
Principles, Legal Doctrines, and Commercial Practices; Robert E. Keeton, Alau
I. Widiss, p. 261). The result is consistent with the public policy underlying the
collateral source rule – that is, x x x the courts have usually concluded that the
liability of a health or accident insurer is not reduced by other possible sources
of indemnification or compensation. (ibid).
Very truly yours,
(SGD.)
RICHARD DAVID C. FUNK II
Attorney IV
Officer-in-Charge
Claims Adjudication Division
On December 3, 2002, the Voluntary Arbitrator rendered a Decision27
finding
MMPC liable to pay or reimburse the amount of hospitalization expenses
already paid by other health insurance companies. The Voluntary Arbitrator
held that the employees may demand simultaneous payment from both the CBA
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TOPIC: Collateral Source Rule
and their dependents’ separate health insurance without resulting to double
insurance, since separate premiums were paid for each contract. He also noted
that the CBA does not prohibit reimbursement in case there are other health
insurers.
Proceedings before the Court of Appeals
MMPC filed a Petition for Review with Prayer for the Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction28 before the CA. It
claimed that the Voluntary Arbitrator committed grave abuse of discretion in not
finding that recovery under both insurance policies constitutes double insurance
as both had the same subject matter, interest insured and risk or peril insured
against; in relying solely on the unauthorized legal opinion of Atty. Funk; and in
not finding that the employees will be benefitted twice for the same loss. In its
Comment,29 MMPSEU countered that MMPC will unjustly enrich itself and profit
from the monthly premiums paid if full reimbursement is not made.
On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite
the lack of a provision which bars recovery in case of payment by other insurers,
the wordings of the subject provision of the CBA showed that the parties
intended to make MMPC liable only for expenses actually incurred by an
employee’s qualified dependent. In particular, the provision stipulates that
payment should be made directly to the hospital and that the claim should be
supported by actual hospital and doctor’s bills. These mean that the employees
shall only be paid amounts not covered by other health insurance and is more in
keeping with the principle of indemnity in insurance contracts. Besides, a
contrary interpretation would "allow unscrupulous employees to unduly profit
from the x x x benefits" and shall "open the floodgates to questionable claims x x
x."30chanroblesvirtuallawlibrary
The dispositive portion of the CA Decision31 reads:chanroblesvirtualawlibrary
WHEREFORE, the instant petition is GRANTED. The decision of the voluntary
arbitrator dated December 3, 2002 is REVERSED and SET ASIDE and
judgment is rendered declaring that under Art. XI, Sec. 4 of the Collective
Bargaining Agreement between petitioner and respondent effective August 1,
1999 to July 31, 2002, the former’s obligation to reimburse the Union members
for the hospitalization expenses incurred by their dependents is exclusive of
those paid by the Union members to the hospital.
SO ORDERED.32
In its Motion for Reconsideration,33 MMPSEU pointed out that the alleged
oppression that may be committed by abusive employees is a mere possibility
whereas the resulting losses to the employees are real. MMPSEU cited Samsel

Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
v. Allstate Insurance Co.,34 wherein the Arizona Supreme Court explicitly ruled
that an insured may recover from separate health insurance providers,
regardless of whether one of them has already paid the medical expenses
incurred. On the other hand, MMPC argued in its Comment35 that the cited
foreign case involves a different set of facts. The CA, in its Resolution 36 dated
December 5, 2006, denied MMPSEU’s motion.
Hence, this Petition.cralaw lawlibrary
Issues
MMPSEU presented the following grounds in support of its
Petition:chanroblesvirtualawlibrary
A.
THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT REVERSED THE
DECISION DATED 03 [DECEMBER] 2002 OF THE VOLUNTARY
ARBITRATOR BELOW WHEN THE SAME WAS SUPPORTED BY
SUBSTANTIAL EVIDENCE, INCLUDING THE OPINION OF THE INSURANCE
COMMISSION THAT RECOVERY FROM BOTH THE CBA AND SEPARATE
HEALTH CARDS IS NOT PROHIBITED IN THE ABSENCE OF ANY SPECIFIC
PROVISION IN THE CBA.cralaw lawlibrary
B.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN
OVERTURNING THE DECISION OF THE VOLUNTARY ARBITRATOR
WITHOUT EVEN GIVING ANY LEGAL OR JUSTIFIABLE BASIS FOR SUCH
REVERSAL.cralaw lawlibrary
C.
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO
CONSIDER OR EVEN MENTION ANYTHING ABOUT THE AMERICAN
AUTHORITIES CITED IN THE RECORDS THAT DO NOT PROHIBIT, BUT IN
FACT ALLOW, RECOVERY FROM TWO SEPARATE HEALTH
PLANS.cralaw lawlibrary
D.
THE COURT OF APPEALS GRAVELY ERRED IN GIVING MORE
IMPORTANCE TO A POSSIBLE, HENCE MERELY SPECULATIVE, ABUSE
BY EMPLOYEES OF THE BENEFITS IF DOUBLE RECOVERY WERE
ALLOWED INSTEAD OF THE REAL INJURY TO THE EMPLOYEES WHO
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TOPIC: Collateral Source Rule
ARE PAYING FOR THE CBA HOSPITALIZATION BENEFITS THROUGH
MONTHLY SALARY DEDUCTIONS BUT WHO MAY NOT BE ABLE TO
AVAIL OF THE SAME IF THEY OR THEIR DEPENDENTS HAVE OTHER
HEALTH INSURANCE.37
MMPSEU avers that the Decision of the Voluntary Arbitrator deserves utmost
respect and finality because it is supported by substantial evidence and is in
accordance with the opinion rendered by the Insurance Commission, an agency
equipped with vast knowledge concerning insurance contracts. It maintains that
under the CBA, member-employees are entitled to full reimbursement of medical
expenses incurred by their dependents regardless of any amounts paid by the
latter’s health insurance provider. Otherwise, non-recovery will constitute unjust
enrichment on the part of MMPC. It avers that recovery from both the CBA and
other insurance companies is allowed under their CBA and not prohibited by law
nor by jurisprudence.cralaw lawlibrary
Our Ruling
The Petition has no merit.
Atty. Funk erred in applying the
collateral source rule.
The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk that the
employees may recover benefits from different insurance providers without
regard to the amount of benefits paid by each. According to him, this view is
consistent with the theory of the collateral source rule.
As part of American personal injury law, the collateral source rule was originally
applied to tort cases wherein the defendant is prevented from benefitting from
the plaintiff’s receipt of money from other sources.38 Under this rule, if an injured
person receives compensation for his injuries from a source wholly independent
of the tortfeasor, the payment should not be deducted from the damages which
he would otherwise collect from the tortfeasor.39 In a recent Decision40 by the
Illinois Supreme Court, the rule has been described as "an established
exception to the general rule that damages in negligence actions must be
compensatory." The Court went on to explain that although the rule appears to
allow a double recovery, the collateral source will have a lien or subrogation
right to prevent such a double recovery.41 In Mitchell v. Haldar,42 the collateral
source rule was rationalized by the Supreme Court of
Delaware:chanroblesvirtualawlibrary
The collateral source rule is ‘predicated on the theory that a tortfeasor has no
interest in, and therefore no right to benefit from monies received by the injured

Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
person from sources unconnected with the defendant’. According to the
collateral source rule, ‘a tortfeasor has no right to any mitigation of damages
because of payments or compensation received by the injured person from an
independent source.’ The rationale for the collateral source rule is based upon
the quasi-punitive nature of tort law liability. It has been explained as
follows:chanroblesvirtualawlibrary
The collateral source rule is designed to strike a balance between two
competing principles of tort law: (1) a plaintiff is entitled to compensation
sufficient to make him whole, but no more; and (2) a defendant is liable for all
damages that proximately result from his wrong. A plaintiff who receives a
double recovery for a single tort enjoys a windfall; a defendant who escapes, in
whole or in part, liability for his wrong enjoys a windfall. Because the law must
sanction one windfall and deny the other, it favors the victim of the wrong rather
than the wrongdoer.
Thus, the tortfeasor is required to bear the cost for the full value of his or her
negligent conduct even if it results in a windfall for the innocent
plaintiff. (Citations omitted)
As seen, the collateral source rule applies in order to place the responsibility for
losses on the party causing them.43 Its application is justified so that "'the
wrongdoer should not benefit from the expenditures made by the injured party or
take advantage of contracts or other relations that may exist between the injured
party and third persons."44 Thus, it finds no application to cases involving no-
fault insurances under which the insured is indemnified for losses by insurance
companies, regardless of who was at fault in the incident generating the
losses.45 Here, it is clear that MMPC is a no-fault insurer. Hence, it cannot be
obliged to pay the hospitalization expenses of the dependents of its employees
which had already been paid by separate health insurance providers of said
dependents.
The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view that the
covered employees are entitled to full payment of the hospital expenses incurred
by their dependents, including the amounts already paid by other health
insurance companies based on the theory of collateral source rule.
The conditions set forth in the CBA provision
indicate an intention to limit MMPC’s liability
only to actual expenses incurred by the employees’
dependents, that is, excluding the amounts paid
by dependents’ other health insurance providers.
The Voluntary Arbitrator ruled that the CBA has no express provision barring
claims for hospitalization expenses already paid by other insurers. Hence, the
covered employees can recover from both. The CA did not agree, saying that
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TOPIC: Collateral Source Rule
the conditions set forth in the CBA implied an intention of the parties to limit
MMPC’s liability only to the extent of the expenses actually incurred by their
dependents which excludes the amounts shouldered by other health insurance
companies.
We agree with the CA. The condition that payment should be direct to the
hospital and doctor implies that MMPC is only liable to pay medical expenses
actually shouldered by the employees’ dependents. It follows that MMPC’s
liability is limited, that is, it does not include the amounts paid by other health
insurance providers. This condition is obviously intended to thwart not only
fraudulent claims but also double claims for the same loss of the dependents of
covered employees.
It is well to note at this point that the CBA constitutes a contract between the
parties and as such, it should be strictly construed for the purpose of limiting the
amount of the employer’s liability.46 The terms of the subject provision are clear
and provide no room for any other interpretation. As there is no ambiguity, the
terms must be taken in their plain, ordinary and popular sense.47 Consequently,
MMPSEU cannot rely on the rule that a contract of insurance is to be liberally
construed in favor of the insured. Neither can it rely on the theory that any doubt
must be resolved in favor of labor.
Samsel v. Allstate Insurance Co. is not
on all fours with the case at bar.
MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the Supreme
Court of Arizona allowed the insured to enjoy medical benefits under an
automobile policy insurance despite being able to also recover from a separate
health insurer. In that case, the Allstate automobile policy does not contain any
clause restricting medical payment coverage to expenses actually paid by the
insured nor does it specifically provide for reduction of medical payments
benefits by a coordination of benefits.48 However, in the case before us, the
dependents’ group hospitalization insurance provision in the CBA specifically
contains a condition which limits MMPC’s liability only up to the extent of the
expenses that should be paid by the covered employee’s dependent to the
hospital and doctor. This is evident from the portion which states that "payment
[by MMPC] shall be direct to the hospital and doctor." 49 In contrast, the Allstate
automobile policy expressly gives Allstate the authority to pay directly to the
insured person or on the latter’s behalf all reasonable expenses actually
incurred. Therefore, reliance on [Samsel] is unavailing because the facts therein
are different and not decisive of the issues in the present case.
To allow reimbursement of amounts paid
under other insurance policies shall constitute
double recovery which is not sanctioned by law.

Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
MMPSEU insists that MMPC is also liable for the amounts covered under other
insurance policies; otherwise, MMPC will unjustly profit from the premiums the
employees contribute through monthly salary deductions.
This contention is unmeritorious.
To constitute unjust enrichment, it must be shown that a party was unjustly
enriched in the sense that the term unjustly could mean illegally or
unlawfully.50 A claim for unjust enrichment fails when the person who will benefit
has a valid claim to such benefit.51chanroblesvirtuallawlibrary
The CBA has provided for MMPC’s limited liability which extends only up to the
amount to be paid to the hospital and doctor by the employees’ dependents,
excluding those paid by other insurers. Consequently, the covered employees
will not receive more than what is due them; neither is MMPC under any
obligation to give more than what is due under the CBA.
Moreover, since the subject CBA provision is an insurance contract, the rights
and obligations of the parties must be determined in accordance with the
general principles of insurance law.52 Being in the nature of a non-life insurance
contract and essentially a contract of indemnity, the CBA provision obligates
MMPC to indemnify the covered employees’ medical expenses incurred by their
dependents but only up to the extent of the expenses actually incurred. 53 This is
consistent with the principle of indemnity which proscribes the insured from
recovering greater than the loss.54 Indeed, to profit from a loss will lead to unjust
enrichment and therefore should not be countenanced. As aptly ruled by the
CA, to grant the claims of MMPSEU will permit possible abuse by employees.
WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006
and Resolution dated December 5, 2006 of the Court of Appeals in CA-G.R. SP
No. 75630, are AFFIRMED.
SO ORDERED.
CASE DIGEST
FACTS:
The Collective Bargaining Agreement (CBA) of the parties in this case provides
that the company shoulder the hospitalization expenses of the dependents of
covered employees subject to certain limitations and restrictions. Accordingly,
covered employees pay part of the hospitalization insurance premium through
monthly salary deduction while the company, upon hospitalization of the covered
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TOPIC: Collateral Source Rule
employees' dependents, shall pay the hospitalization expenses incurred for the
same.
Each employee shall pay one hundred pesos (P100.00) per month through
salary deduction as his share in the payment of the insurance premium for the
above coverage with the balance of the premium to be paid by the COMPANY.
If the COMPANY is self-insured the one hundred pesos (P100.00) per employee
monthly contribution shall be given to the COMPANY which shall shoulder the
expenses subject to the above level of benefits and subject to the same
limitations and restrictions provided for in Annex "B" hereof.
The hospitalization expenses must be covered by actual hospital and doctor’s
bills and any amount in excess of the above mentioned level of benefits will be
for the account of the employee.
When the first CBA expired, the parties executed another CBA incorporating the
same provisions on dependents’ hospitalization insurance benefits but in the
increased amount of P50,000.00. The room and board expenses, as well as the
doctor’s call fees, were also increased to P375.00.
On separate occasions, three members of MMPSEU, namely, Ernesto Calida,
Hermie Juan Oabel and Jocelyn Martin, filed claims for reimbursement of
hospitalization expenses of their dependents.
MMPC paid only a portion of their hospitalization insurance claims, not the full
amount. In the case of Calida, his wife, Lanie, was confined at Sto. Tomas
University Hospital from September 4 to 9, 1998 due to Thyroidectomy. The
medical expenses incurred totalled P29,967.10. Of this amount, P9,000.00
representing professional fees was paid by MEDICard Philippines, Inc. which
provides health maintenance to Lanie. MMPC only paid P12,148.63. It did not
pay the P9,000.00 already paid by MEDICard and the P6,278.47 not covered by
official receipts. It refused to give to Calida the difference between the amount of
medical expenses of P27,427.10 which he claimed to be entitled to under the
CBA and the P12,148.63 which MMPC directly paid to the hospital.
In the case of Martin, his father, Jose, was admitted at The Medical City from
March 26 to 27, 2000 due to Acid Peptic Disease and incurred medical
expenses amounting to P9,101.30. MEDICard paid P8,496.00. Consequently,
MMPC only paid P288.40, after deducting from the total medical expenses the
amount paid by MEDICard and the P316.90 discount given by the hospital.
Claiming that under the CBA, they are entitled to hospital benefits amounting to
P27,427.10, P6,769.35 and P8,123.80, respectively, which should not be

Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
reduced by the amounts paid by MEDICard and by Prosper, Calida, Oabel and
Martin asked for reimbursement from MMPC.
However, MMPC denied the claims contending that double insurance would
result if the said employees would receive from the company the full amount of
hospitalization expenses despite having already received payment of portions
thereof from other health insurance providers.
This prompted the MMPSEU President to write the MMPC President demanding
full payment of the hospitalization benefits.
MMPC clarified that the claims of the said MMPSEU members have already
been paid on the basis of official receipts submitted.
MMPSEU referred the dispute to the National Conciliation and Mediation Board
and requested for preventive mediation.
MMPSEU alleged that there is nothing in the CBA which prohibits an employee
from obtaining other insurance or declares that medical expenses can be
reimbursed only upon presentation of original official receipts. It stressed that
the hospitalization benefits should be computed based on the formula indicated
in the CBA without deducting the benefits derived from other insurance
providers. Besides, if reduction is permitted, MMPC would be unjustly benefited
from the monthly premium contributed by the employees through salary
deduction. MMPSEU added that its members had legitimate claims under the
CBA and that any doubt as to any of its provisions should be resolved in favor of
its members. Moreover, any ambiguity should be resolved in favor of labor.
On the other hand, MMPC argued that the reimbursement of the entire amounts
being claimed by the covered employees, including those already paid by other
insurance companies, would constitute double indemnity or double insurance,
which is circumscribed under the Insurance Code. Moreover, a contract of
insurance is a contract of indemnity and the employees cannot be allowed to
profit from their dependents’ loss.
The Voluntary Arbitrator rendered a Decision finding MMPC liable to pay or
reimburse the amount of hospitalization expenses already paid by other health
insurance companies. The Voluntary Arbitrator held that the employees may
demand simultaneous payment from both the CBA and their dependents’
separate health insurance without resulting to double insurance, since separate
premiums were paid for each contract. He also noted that the CBA does not
prohibit reimbursement in case there are other health insurers.
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TOPIC: Collateral Source Rule
MMPC filed a Petition for Review before the CA. It claimed that the Voluntary
Arbitrator committed grave abuse of discretion in not finding that recovery under
both insurance policies constitutes double insurance as both had the same
subject matter, interest insured and risk or peril insured against; in relying solely
on the unauthorized legal opinion of Atty. Funk; and in not finding that the
employees will be benefited twice for the same loss.
On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite
the lack of a provision which bars recovery in case of payment by other insurers,
the wordings of the subject provision of the CBA showed that the parties
intended to make MMPC liable only for expenses actually incurred by an
employee’s qualified dependent. In particular, the provision stipulates that
payment should be made directly to the hospital and that the claim should be
supported by actual hospital and doctor’s bills.
QUESTION: Are member-employees entitled to full payment of the hospital
expenses incurred by their dependents, including the amounts already paid by
other health insurance companies from MITSUBISHI under their CBA?
ANSWER: NO. The Voluntary Arbitrator based his ruling on the opinion of Atty.
Funk that the employees may recover benefits from different insurance
providers without regard to the amount of benefits paid by each. Atty. Funk erred
in applying thecollateral source rule.
Under this rule, if an injured person receives compensation for his injuries from a
source wholly independent of the tortfeasor, the payment should not be
deducted from the damages which he would otherwise collect from the
tortfeasor. In a recent Decision by the Illinois Supreme Court, the rule has been
described as "an established exception to the general rule that damages in
negligence actions must be compensatory." The Court went on to explain that
although the rule appears to allow a double recovery, the collateral source will
have a lien or subrogation right to prevent such a double recovery.
The collateral source rule is ‘predicated on the theory that a tortfeasor has no
interest in, and therefore no right to benefit from monies received by the injured
person from sources unconnected with the defendant’. According to the
collateral source rule, ‘a tortfeasor has no right to any mitigation of damages
because of payments or compensation received by the injured person from an
independent source.’
As seen, the collateral source rule applies in order to place the responsibility for
losses on the party causing them. Its application is justified so that "'the
wrongdoer should not benefit from the expenditures made by the injured party or
take advantage of contracts or other relations that may exist between the injured
 Page 8 of 8
Insurance Law - Mitsubishi Motors Phils Salaried Employees Union v Mitsubishi Motors Phils. Corp
TOPIC: Collateral Source Rule
party and third persons." Thus, it finds no application to cases involving no-fault
insurances under which the insured is indemnified for losses by insurance
companies, regardless of who was at fault in the incident generating the losses.

Here, it is clear that MMPC is a no-fault insurer. Hence, it cannot be obliged to

pay the hospitalization expenses of the dependents of its employees which had
already been paid by separate health insurance providers of said dependents.

The conditions set forth in the CBA provision indicate an intention to limit
MMPC’s liability only to actual expenses incurred by the employees’
dependents, that is, excluding the amounts paid by dependents’ other health
insurance providers.

The condition that payment should be direct to the hospital and doctor implies
that MMPC is only liable to pay medical expenses actually shouldered by the
employees’ dependents. It follows that MMPC’s liability is limited, that is, it does
not include the amounts paid by other health insurance providers. This condition
is obviously intended to thwart not only fraudulent claims but also double claims
for the same loss of the dependents of covered employees.

It is well to note at this point that the CBA constitutes a contract between the
parties and as such, it should be strictly construed for the purpose of limiting the
amount of the employer’s liability.

To allow reimbursement of amounts paid under other insurance policies shall

constitute double recovery which is not sanctioned by law.

The CBA has provided for MMPC’s limited liability which extends only up to the
amount to be paid to the hospital and doctor by the employees’ dependents,
excluding those paid by other insurers. Consequently, the covered employees
will not receive more than what is due them; neither is MMPC under any
obligation to give more than what is due under the CBA.

Moreover, since the subject CBA provision is an insurance contract, the rights
and obligations of the parties must be determined in accordance with the
general principles of insurance law. Being in the nature of a non-life insurance
contract and essentially a contract of indemnity, the CBA provision obligates
MMPC to indemnify the covered employees’ medical expenses incurred by their
dependents but only up to the extent of the expenses actually incurred. This is
consistent with the principle of indemnity which proscribes the insured from
recovering greater than the loss. Indeed, to profit from a loss will lead to unjust
enrichment and therefore should not be countenanced.